Employment benefit that is worth your while Part II

Last month, my blog post here elicited this comment


Anonymous said...

I am no fan of this banker, but in order to be objective one should compare with similar positions in other banks as well

I think you have missed the point then. Comparison of the share option price vs the ESOS and what a 3rd party had to pay was clear enough....and anony #3 eloquently added on to it. No matter, benchmarking is what you seek and benchmarking is what you'll get. I already have the annual accounts of Maybank and CIMB when I wrote the first piece.

For financial year ended 31 December 2009, CIMB Group paid out RM21,323,000 as total directors remuneration, with RM16,124,000 for 2 executive directors




A staggering RM14,500,000 was paid to Nazir alone, which represented 68% of the total remuneration of all directors, or 90% of the total executive directors' remuneration.

In addition, he held 27,463,261 ordinary shares as at 31 December 2009 (the next highest director shareholding was Md Nor Md Yusuf at 400,000 shares) with interim and final dividend of RM0.25 for financial year ended 31 December 2009, there was another RM6,865,815 dividend for him; more than 4 times the total remuneration for the year of the other executive director, Mohd Shukri Husin.

Maybank Berhad has been around longer than CIMB and one of the leading banks in Malaysia.

Total profit before tax and zakat for CIMB for financial year ended 31 December 2009 was RM3,811,877,000 and total revenue, broken down as follows:


Interest income 10,539,770,000 ; income from Islamic banking operations 807,060,000; Non-interest income 3,793,557,000 making it a grand total of RM15,140,387,000


By comparison, Maybank has a larger revenue base was RM17,586,337,000 with profit before tax and zakat of RM1,674,292,000; lower than CIMB due to impairment losses on associates & goodwill of RM1,972,585,000


With a larger revenue base, yet total directors' remuneration was merely RM8,647,000; less than half of CIMB.

The 2 Executive Directors of Maybank (Abdul Wahid Omar and Aminuddin Md Desa) received from the Group a grand total of RM2,121,000 for financial year ended 30 June 2009, compared to RM14,500,000 for Nazir.

The shareholders of CIMB would have valid reasons to ask why they have been charged premium pricing for services of a executive director, 14 times the average going rate paid by it's competitor.

Broken down further, it is 10.3 times and 20.5 times over Abdul Wahid and Aminuddin's remuneration respectively; in the year where FDI into Malaysia declined by 81% and the Malaysian economy suffered negative growth.

Perhaps the justification of pricing difference lies in the intricate political-economical connection nurtured and entrenched since the days of the Malaysian Maverick, which continue to thrive and grow today.

In case you are wondering, the highest director shareholding in Maybank as at 30 June 2009 was Spencer Lee Tien Chye at 520,781, no where near Nazir's grand 27 million ordinary shares in CIMB, while the above 2 ex. directors are not even listed.


Moving back 1 year, back in 2008, total payout to executive directors was RM8,429,000 shared by 4 directors, Amirsham A. Aziz got the highest at RM5,656,000, less than half of what Nazir got a year later.

So anony #1, happy now?

Sigh, when I think of the 2.5% fixed deposit available to individual consumers and base lending rate around 6%, is there a case of super normal profits for banks which enable them to pay out such impressive numbers and absorb "losses"?

What about the feeling of the rank and file in banks as eloquently expressed by commentator #3? Admittedly compared to construction workers or factor operators they lead a better life but the earnings gap in Malaysia is not a satisfactory situation for the majority, judging by the Gini Co-efficient index.